Series 7 practice questioneasyOptions — Call Options Basics
Which of the following investors would benefit from a rise in the price of the underlying stock?
- AA put buyer
- BA put writer
- CA call buyer
- DBoth B and C✓ Correct answer
Explanation
Why D — Both B and C
A call buyer profits when the stock price rises above the strike price plus premium. A put writer also benefits from a rising stock price because the put is less likely to be exercised. Both are considered bullish positions.
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